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A`X/9%E{/>ms#z&c4[”?ܿQd 1ohuC> V&VAܜÂ'".ȓ!4 KOh,*Lgo0m>+}s ؜Q@y&4iԿQzŵK_P霞-?|,jPklV|7z|1hsF!kA7Y$R~m?!*i޷zrs zN4EU*[Z qhAO&:Wa%ecMIUf$/+k¬xy/EΣ[ p3yVIJ0v2KTe\NJ«6~yd"JP93%>鰲wPЃCQXWڣ߅ NܓѬ+acPGM%wF 0?KT%*[b#\ % ^ # 0/ UN w 4 z  i x mz   _ %  1N8 72: 1ulE 72 0cbxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 0 Bkk 0 D3, D-_ 0K AS* 0 0D AHP LaserJet 4050 Series PCL 5e,,,,0oo3+s (`$.8dd8    ("  Z6Times New Roman RegularB+ݧHާ C:\PROGRA~1\COREL\WORDPE~1\TEMPLATE\CUSTOM~1\REVISE~1.WPTC:\Program Files\Corel\WordPerfect Office 2000\Template\Custom WP Templates\revised standard opinion.wpt3|xU Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5(CEKQW]cioAutoList1A)A)A)A)A)A)A)A)A)3#37=CIQYag1.a.i.(1)(a)(i)1)a)i)(;3$2#  0  .3  0  - -(|G2$ !.8[dd8         0   d(|3$ !.8[dd8     VVVV'dxd)!dxdx( $ Figure  1  ^_X`YE<<CLevel 1Level 2Level 3Level 4Level 5(|3$ !.8[dd8     ($$   1  X[Z&OLE 2.0 Box <=8C HKKKK !.8[dd8     _  [8AXXdd8  @ ^ [INTHECOURTOFAPPEALSOFTENNESSEE  @kk$ATNASHVILLE#[^ #Ԉ &   August8,2001Session L XAX[ #[XXA#DAVIDBROWNv.RUTHJOHNSON,Commissioner,Tennessee J DepartmentofRevenueXAX[   ^ @@ AppealfromtheChanceryCourtforCoffeeCounty  ^ @@No.99218JohnW.Rollins,Judge  J @@*AV) ` dE<` A   @@TTNo.M200002114_COA_ԄR3CVFiledSeptember19,_2001_   AV) ` dE<` A      Taxpayerpurchasedbaledstrawfromfarmerswhichhesoldtolandscapers,salestaxfree.ANotice  ofAssessmentwasservedonthetaxpayerforthesalestax,pluspenaltyandinterest.Afterpayments x oftheseamountstaxpayerfiledsuitforrefund,challengingtheassessments.Thetrialjudgefound d thatthesalestaxeswereproperlyassessed,butthatbothinterestandpenaltyshouldbewaived.Both P partiesappeal.Weholdthatthetaxpayerisliableforthetaxtogetherwithpenaltyandinterest. <  Tenn.R.App.P.3AppealasofRight;JudgmentoftheChanceryCourt d AffirmedinPart;ReversedinPart;andRemanded  P   #[XA#XAX.[WilliamH._Inman_,Sr.J.,deliveredtheopinionofthecourt,inwhichBenH._Cantrell_,_P.J._,M.S. ( andWilliamC.Koch,Jr.,J.,joined.  PaulG.Summers,AttorneyGeneralandReporter,andSeanD._Clancy_,AssistantAttorneyGeneral,  fortheappellant,RuthJohnson,Commissioner,Tennessee_Departiment_ԀofRevenue,Stateof  Tennessee. t  DoyleF.Richardson,_Tullahoma_,Tennessee,fortheappellee,DavidB.Brown. L"!   OPINION #[XXA9#XAX[ $$t# #[XXA} #XAX[     I. %L!%    Theappellee,DavidB.Brown( Mr.Brown)purchasedhayandstrawfromfarmerswhich '$#' heresoldtolandscapers,whousedthestrawandhayintheirlandscapingbusiness.Mr.Browndid ($( notcollecttaxesonthesesales.#[XXA #XAX[ )$)   ByNoticeofAssessmentdatedNovember19,1996,Mr.Brownwasnotifiedthatheowed +&+ theDepartmentofRevenue$19,814.00insalestax,$4,971.00inpenaltyand$5,661.10ininterest, p,', foratotalof$30,446.10.Hepaidthisamountandthereafterclaimedarefundwhichwasdenied. \-(- _ԇ  Mr.BrownfiledsuitforrefundintheChanceryCourtforCoffeeCountyonMay17,1999,  challengingtheassessmentonthebasisofhisinterpretationofTenn.CodeAnn.676301(c)(1)  andTenn.Comp.RulesandRegs.132051.22(4),whichheclaimedexemptedhimfromthe  assessedtax. t   TheChancellorfoundthatMr.Brownwasliableforcollectingthetaxwhichhadbeen L  properlyassessedagainsthim.ThecourtalsofoundthatMr.Brownshouldberefundedthepenalty 8  andinterestincludedintheassessment,owingtohisapparent confus[ion]astothepropermeaning $ t ofRule132051.22(4)andthecourtsdeterminationthatitwasdifficultforMr.Browntocomply  ` withtherelevantrule.  L    TheissuespresentedforreviewbytheCommissionerofRevenuearewhether(1)acourtmay $  waivetheinterestdueunderTenn.CodeAnn.671801(a)(1)onataxliability,and(2)whether   apenaltymaybewaivedforreasonsotherthanthoseprescribedbyTenn.CodeAnn.671   803(c)(1).     Theissuepresentedforreviewbythetaxpayer,asweperceiveit,iswhetherthesalestaxwas p properlyassessed.Ourreviewisdenovoontherecordwithapresumptionofcorrectnessoffactual \ findingsunlesstheevidencepreponderatesagainstthejudgment.Rule13(d)T.R.A.P.Thereisno H presumptionofcorrectnessastoquestionsoflaw. Foleyv.St.ThomasHospital ,906S.W.2d448 4 (Tenn.Ct.App.1995)  p   II.  H _  ItismadeclearbeyondperadventurebyTenn.CodeAnn.676201(1)thateveryperson   whoengagesinthebusinessofsellingtangiblepersonalpropertyatretailinthisstateisexercising   ataxableprivilege,andataxofsix(6%)percentofthesalespriceofeachitemorarticleoftangible  personalpropertysoldinthisStateislevied.    Thestatutoryschemeprovidesthatsalestaxwillbecollectedfromaconsumerbytheretailer l whosellsthetaxableitem,andthateverydealermakingsalesoftangiblepersonalpropertyforuse X  orotherconsumptioninthisStateisliableforthesalestaximposed.Theterm dealerincludes D! anyonewhosellstangiblepersonalpropertyatretail.Thereisa saleatretailifthereisan 0"  otherwisetaxablesalethatismadetoaconsumerortoanyotherpersonforanypurposesotherthan #l! resale.Tenn.CodeAnn.676201etseq. $X"   Usingherlegislatedpowerstomakeandpublishreasonablerulesandregulationsforthe %0!$ collectionoftaxesinthisState,theCommissionerofRevenuepromulgatedTennesseeRevenueRule &"% 132051.22.ThisRule,whosevalidityisunchallenged,provides,asrelevanthere,thatwhena '#& 8  8`   contractor  agreestolandscapeanarea,thenurserymanorother )$( contractorshallbedeemedtobetheuser and consumerofthe |*%) nurserystock,fertilizer,seedandany  othertangiblepersonal l+&* property,andshallbeliablefortaxonthepurchasepriceorfair  marketvalueofthetangiblepersonalpropertyusedinconnection  withhiscontract.[Emphasisadded].` x` x   ThepredicateforthisRuleistobefoundinthefactthatsincelandscapingisnotataxable ` serviceunderTenn.CodeAnn.676102(24)(F),itwasnecessarytoensurethattaxesarepaidon L  allofthetangiblepersonalpropertyusedinthelandscapingbusiness. 8    TaxpayerallegesthatheandhisaccountantreliedonTennesseeCodeAnnotatedSection67  ` 6301(c)(1),whichprovides:  L  8  8`   Eachandeveryagriculturalcommoditysoldbyanypersonotherthan $  aproducer,toanyotherperson,whopurchasesnotfordirect   consumptionbutforthepurposeofacquiringrawproductsforuseor   forsaleintheprocessofpreparing,finishing,ormanufacturingsuch   agriculturalcommodityfortheultimateconsumertradeshallbeand   isexemptfromanyandallprovisionsofthischapter,including p paymentofthetaxapplicabletothesale,storage,use,transfer,orany \ otherutilizationorhandlingthereof,exceptwhensuchagricultural H commodityisactuallysoldasamarketableorfinishedproducttothe 4 ultimateconsumer,andinnocaseshallmorethanone(1)taxbe  p exacted. \` x` x   ThetaxpayersrelianceonthisSectionismisplaced,sincetheexceptiondoesnotapplyif 4 theagriculturalcommodityissoldtotheultimateconsumers,here,thelandscapers.Weagreewith   theChancellorthatthetaxpayerisliableforthetax.     III.   %  Tenn.CodeAnn.671801(a)(1)providesinpertinentpart: l 8  8`   Whenanypersonliabletopayanytaxthatiscollectedor D! administeredbythecommissionerofrevenuefailstopaythesame, 0"  oranyportionthereof,onorbeforethedatewhensuchtaxshallbe #l! requiredtobepaid,  interestshallbeaddedtotheamountoftaxdue $X" ...[Emphasisadded].$H #` x` x Tenn.CodeAnn.671801(a)(2)furtherprovidesthatall delinquentordeficientpaymentsof & "% taxeseitheradministeredorcollectedbythecommissionershallaccrueinterestfromthedate ' #& delinquentordeficientuntilpaid. (#'   ThereisnostatutoryauthoritywhichallowstheCommissionerofRevenuetorefund *%) statutoryinterestintaxcases,andnocaselawpermittingtheCommissionertomakesucharefund. l+&* Impositionofinterestismandatoryandnonwaivable,andthetrialcourterredinwaivingthe  assessedinterest.     IV.  t *  Tenn.CodeAnn.671803authorizestheCommissionertowaiveanystatutorypenalty L  imposedundertherevenuelawsadministeredbyher,underspecifiedcircumstances.Shearguesthat 8  thetrialcourterredinthestandarditusedinorderingawaiverinthiscase.Thegroundsforwhich $ t apenaltymaybewaivedunderTenn.CodeAnn.671803(c)(1)are:  `  (83"3"  8  8`   3[-2  A  )3  0 ` x` x  Thetaxpayerincurredthedeficiencyasaresultofhaving  8  beenmisledbyerroneousadviceoraction,whichwasnot $  clearlyincontraventionofthelaw,uponthepartofofficials   chargedwiththeenforcementofthisstatestaxstatutes;3[--݌  x x Ќ  "3"  8  8`   3z/2  B  )3  0 ` x` x  Thetaxpayerincurredthedeficiencyasaresultoflegal   misadvice,whichwasnotclearlyincontraventionofthelaw, p fromanostensiblycompetentandfinanciallyindependent \ lawyeroraccountant;3z//݌H x x Ќ  "3"  8  8`   3n12  C  )3  0 ` x` x  Theprovisionsofthepertinentlaworregulationwereatthe  p timethedeficiencywasincurredunsettled,unclear,and  \ misleadingtoareasonablepersonandthetaxpayeractedin H goodfaithuponareasonablethoughmistakenapplicationof 4 suchlaworregulation,withtheresultthatthetaxdeficiency   inquestionwasincurred;3n11݌  x x Ќ  "3"  8  8`   3 42  D  )3  0 ` x` x  Thedeficiencyresultedfromreliancebythetaxpayerupon  factual(butnotlegal)misrepresentationsmadebypersonwith  whomthetaxpayerdealtinthecourseofthetaxpayers l business,otherthanthetaxpayersownagentsoremployees, X  thetaxpayerhavingnoreasontodoubtorquestionsuch D! misrepresentations;or3 4Z4݌0"  x x Ќ  "3"  8  8`   362  E  )3  0 ` x` x  Thedeficiencyresultedfromamistakeoffactonthepartof $X" thetaxpayerwhothereaftervoluntarilyandwithoutanykind $D # ofdemanduponthepartoftheofficialschargedwiththe %0!$ enforcementofthelawtenderstheamountofthedeficiency, &"% plusaccruedinterestthereon.366݌'#& x x Ќ  Ataxpayermayalsoescapepenaltyifthetaxpayerhas doneeverythingthetaxpayercould )$(  reasonablybeexpectedtodoasanordinarilyintelligentandreasonablyprudentbusinesspersonand |*%) whichclearlynegateseitherawillfuldisregardofthelaworgrossnegligence.Tenn.CodeAnn.  671803(c)(2).     WeagreewiththeCommissionerthatthetrialcourtsdeterminationthatwaiverwas t appropriatewasnotbaseduponanyofthestatutorygrounds;ratheritwasbaseduponthealleged ` confusionofMr.BrownastothemeaningoftheTenn.Rev.Rule132051.22.Tenn.CodeAnn. L  671803(c)(1)(C)permitsawaiverifastatuteorruleis unsettled,unclear,andmisleadingtoa 8  reasonablepersonandifthetaxpayer actedingoodfaithuponareasonablethoughmistaken $ t applicationofsuchlaworregulation.WenotethatthetrialcourtdidnotfindthattheRuleitself  ` wasunclear,butmerelytheMr.Brownwasconfusedastoitsmeaning.  L    Mereconfusiononthepartofthetaxpayer,intheabsenceofsomelanguageintheRuleitself $  thatis unsettled,unclearandmisleading isinsufficienttojustifythewaiverofapenalty.In James   v.Huddleston ,795S.W.2d661,664(Tenn.1990),theTennesseeSupremeCourtspecificallyheld   that, failurestomakecorrectreturnsduetoerrors,oversights,andhonestmistakesarenotgrounds   forequitablerelieffrompenalties.TheRulecontainsnoarcanelanguageanddoesnotengender   confusion.Mr.BrownsassertedconfusionisnotwithintheambitoftheRule. p   Thejudgmentisaffirmedastothedenialofarefund.Thejudgmentisreversedastothe H orderedrefundofpenaltyandinterest.Thecaseisremandedforconsiderationofcosts,attorney 4 feesandlitigationexpensesasauthorizedbyTenn.CodeAnn.6711803(d).Courtcostsare  p assessedtoMr.Brown.  \    `     h    `     h     ___________________________________      `     h     WILLIAMH.INMAN,SENIORJUDGE     `     h